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Edited version of your written advice

Authorisation Number: 1012921769724

Date of advice: 2 December 2015

Ruling

Subject: GST and the supply of perfusionist services

Question

Are your supplies of the following services GST free pursuant to Division 38 of the A New Tax System (Goods and Services Tax) Act 1999?

Answer

No

Relevant facts and circumstances

You provide services to a hospital to enable it either to provide hospital treatment, or in the course of hospital treatment.

You are registered for GST.

You are not registered as a medical practitioner.

You invoice the hospital for the supply of your services as a perfusionist.

The hospital invoices the patient (or Medicare) for the supply of its services.

You provide a service to the Hospital as part of a medical procedure whereby you set up and run cardiopulmonary bypass in cardiac and vascular procedures. Specifically this involves attending a cardiac theatre environment in concert with cardiac surgeons and anaesthetists. You place the patient on cardio pulmonary bypass so the heart can be stopped to enable the heart to be operated on e.g. coronary bypass, valve replacements, etc. These services have specific Medicare Item numbers in the Medicare Benefit Scheme:-

ECMO involves the repositioning of a device, similar to a small pump, which is directly attached to the patient. Your role in this procedure is to monitor the device throughout the procedure.

As part of your contract with the hospital, you are entitled to charge the hospital an "on call" fee to compensate you for time you need to allocate to the hospital for unplanned surgeries. As many of these procedures are emergency cases, you need to be on call and available to attend theatre when required, The basis for your fee is a weekly set fee rate for the time on call but not specifically in theatre. You need to be available at short notice 24 hours a day for emergency cases. You need to be within a certain distance of the hospital to be available to attend procedures if required.

It may be separately provided for within future contract arrangements that from time to time you may have to provide the equipment to be utilised within the medical procedures. This may occur where the hospital does not own or have access to the Heart Lung Machinery or the machinery owned by the hospital is not in adequate repair. You are currently sourcing this equipment to enable us to lease or hire the equipment to the hospital as a part of the provision of your "support" services.

The ownership of this equipment may or may not be in your name, but the purpose for use and intention of our acquisition is only for use within Heart Lung surgery.

Critical to placing a patient on cardio-pulmonary bypass is the application/set-up of disposable, single-use circuitry through which blood flows during the procedure. This circuitry is incorporated into the Heart Lung Machine. Any costs for consumable items are integral to and connected with the operation of the machinery or in the course of the medical service for which you invoice the Hospital.

This service does not currently have a Medicare Item number. It involves a 'cell saving' auto-transfusion device that collects, washes and concentrates blood loss during cardiac, vascular and orthopaedic operations for re-infusion into the patient. Your role in this procedure is to set-up the machine and disposables, to process (wash/concentrate) blood collected in the device and to prepare the end-product (concentrated red blood cells) for reinfusion by the anaesthetist. This service is intrinsically linked to the provision of the service connected to the medical procedure.

You provided a draft copy of a proposed contract with the hospital.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 9-5

A New Tax System (Goods and Services Tax) Act 1999 Section 38-7

A New Tax System (Goods and Services Tax) Act 1999 Section 38-45

A New Tax System (Goods and Services Tax) Act 1999 Section 195-1

Reasons for decision

In this reasoning, unless otherwise stated,

Under section 9-5, an entity makes a taxable supply if:

Your supplies meet the positive requirements of 9-5 and are not input taxed. Therefore they will be taxable unless they are GST free.

Under subsection 38-7(1), the supply of a medical service is GST-free.

A 'medical service' is defined under section 195-1 to mean:

'Medical practitioner' is defined in section 195-1 as a person who is a medical practitioner for the purposes of the Health Insurance Act 1973 - which defines medical practitioner:

"medical practitioner" means a person registered or licensed as a medical practitioner under a law of a State or Territory that provides for the registration or licensing of medical practitioners but does not include a person so registered or licensed:

      (a) whose registration, or licence to practise, as a medical practitioner in any State or Territory has been suspended, or cancelled, following an inquiry relating to his or her conduct; and

      (b) who has not, after that suspension or cancellation, again been authorised to register or practise as a medical practitioner in that State or Territory.

A medicare benefit is payable for the following services, which have specific Medicare Item numbers in the Medicare Benefit Scheme:-

The first limb of the definition of 'medical service' under section 195-1 is a service for which a medicare benefit is payable under Part II of the Health Insurance Act 1973 (HIA).

Under section 10 of the HIA, where medical expenses are incurred in respect of a professional service rendered in Australia to an eligible person, medicare benefit calculated in accordance with subsection (2) is payable, subject to and in accordance with this Act, in respect of that professional service.

Under section 20 of the HIA, medicare benefit in respect of a professional service is payable to the person who incurs the medical expenses in respect of that service.

The HIA provides the following relevant definitions:

The provision requires that it be a service for which a medicare benefit is payable (ie actually payable) under the Health Insurance Act (HIA), with a medicare item number being one aspect only. For a medicare benefit to be payable the performer must have a provider number and the person be an eligible person. It is the eligible person who has the right to the payment of a medicare benefit.

Although some of your services are for items that have a medicare item number, there is no medicare benefit payable for the supply of these services to the hospital. The hospital cannot claim a medicare benefit in its own right for the supply to it. If a medicare benefit is payable for the supply, it is for the supply by the hospital to the patient.

Your services to the hospital do not fall within the first limb of the definition of 'medical service' under section 195-1. Therefore, it is necessary to determine whether you are making a supply under the second limb of the definition of 'medical service' in section 195-1 of the GST Act.

The first requirement of the second limb of the definition of 'medical service' is that the service is provided by or on behalf of a medical practitioner.

There is currently no form of statutory recognition, registration or credentialing of perfusionists by an Australian government. Accordingly, as a perfusionist, you are not a medical practitioner for GST purposes.

The second requirement of the second limb of the definition of 'medical service' is that the service is generally accepted in the medical profession as being necessary for the appropriate treatment of the recipient of the supply.

It is considered that 'appropriate treatment' is established where a practitioner assesses the recipient's state of health and determines a process to pursue in an attempt to preserve, restore or improve the physical or psychological wellbeing of the recipient and includes subsequent supplies for the assessed process. Appropriate treatment includes the principles of preventative medicine.

Section 195-1 defines 'recipient' in relation to a supply to mean the entity to which the supply was made. Your supply is being made to the hospital. As such, the supply is not for the appropriate treatment of the recipient of the supply. Therefore, you are not making a GST-free supply under subsection 38-7(1) when you provide services to the hospital.

You are registered for GST and the supply satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under Division 38 nor input taxed under Division 40. Therefore, you are making a taxable supply under section 9-5 when you provide your services to the hospital.

As with your supply of the cardio pulmonary bypass related services, the services are not supplied by a medical practitioner. Further, the recipient of your supply is the hospital.

Therefore, you are making a taxable supply under section 9-5 when you provide this service to the hospital.

As part of your contract with the Hospital, you are entitled to charge the hospital an "on call" fee to compensate you for time you need to allocate to the hospital for unplanned surgeries.

The on call services are not supplied by a medical practitioner. Further, the recipient of your supply is the hospital.

Therefore, you are making a taxable supply under section 9-5 when you provide this service to the hospital.

The supply of a medical aid or appliance is GST-free under subsection 38-45(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) if it is:

An item will only be GST-free if it meets all three requirements of subsection 38-45(1) of the GST Act.

The first requirement is that the thing supplied must be covered by an item listed in the table in Schedule 3 to the GST Act or Schedule 3 to the GST Regulations.

Currently, neither Schedule 3 of the GST Act nor the GST Regulations lists any item relevant to the heart lung machine.

As the first requirement of subsection 38-45(1) of the GST Act is not met, it is not necessary to consider the remaining requirements.

Your supply, by way of hire, of a heart lung machine is not a GST-free supply.

Under subsection 38-7(3), a supply of goods to an individual is GST-free in certain circumstances. Your supply of the disposables is to the hospital. Therefore, it is not a GST-free supply under subsection 38-7(3).

Rather, the disposables are a separate supply to the hospital in preparation for the provision of your services as a perfusionist. Accordingly, your supply of the disposables is not a GST-free supply.

Further, if the supply of the disposables is part of a composite supply of your perfusionist services, supply of the disposables is part of a supply that is not GST-free - as explained at part 1.

As with your supply of the cardio pulmonary bypass related services, the services are not supplied by a medical practitioner. Further, the recipient of your supply is the hospital.

Therefore, you are making a taxable supply under section 9-5 when you provide this service to the hospital.

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